Many financial transactions are now executed electronically, and the trend today is toward a virtually “cashless” economic system. Forms of cashless commercial transactions include credit card transactions, bank card ATM debit transactions, and transactions with prepaid cards.
In a credit card transaction, a customer presents the card to a vendor, and the vendor typically obtains on-line authorization for the purchase. If authorized, the purchase if executed, and the vendor obtains payment from the credit card company.
In a bank card debit transaction, a vendor requests payment directly from the customer's bank account from an on-line point of sale terminal. The bank transfers the transaction amount from the customer's account to the account of the vendor.
Pre-paid cards can also be used in commercial transactions. In this system, the customer purchases a pre-paid card from a vendor. Pre-paid cards are generally purchased for specific goods or services to provide the customer with a temporary convenient means to perform certain cashless transactions. Pre-paid cards can utilize off-line authorization methods wherein the account balance is stored on a memory device incorporated into card itself. Examples of off-line pre-paid cards include tokens for vending machines and public transportation. Third party online authorization methods for pre-paid cards can also be used where the customer has provided funds which are deposited in a third party account for payment of debit transactions. The accounts are settled by the third party using on-line authorization procedures. A commonly used type of on-line pre-paid card is a telephone long distance card. A drawback of pre-paid cards is that they require the customer to purchase goods and services in advance of the planned use or acquisition of the goods and services.
The prevalence of electronic commerce raises concerns of the consumer's right to privacy. Credit and ATM bank debit card purchases are not truly analogous to cash purchases in that credit and debit card purchases are always associated with the identity of the account holder. Consumers purchasing goods and services using credit or debit cards may unwittingly become subjects of market research where their purchasing habits can be tracked by a third party. Credit and bank debit card systems have the advantage of providing global access to currency, however such systems do not allow for anonymous transactions. It would therefore be desirable to provide a debit account system which offers global accessability, and also protects the identity of the consumer. Ideally, personal identification data would not be necessary to establish a debit account in such a system.
In many purchasing situations, credit cards and bank debit cards are becoming the standard means of executing financial transactions. Many individuals are extremely disadvantaged in today's “cashless” environment in that they do not have the means to acquire credit cards, and lack sufficient means to maintain a bank account. It would be highly desirable to create a system where any individual could quickly and conveniently establish a debit account which has the functionality of a credit or debit card for making purchases or acquiring cash. In order to provide ease of access to the system, it would also be desirable to provide the means to establish such an account at a POS transaction terminal which would typically used at a merchant locations.
With the use of plastic cards, such as magnetic strip cards, there is always a risk that the card itself will become lost or stolen. If a plastic card is issued by a merchant, the merchant must maintain an inventory of plastic cards. Thus there is a production cost associated with the plastic card system. To ensure universal portability of the account, and to protect against lost or theft of account information, it would be highly advantageous to have a debit account system which does not require plastic cards or other physical tokens to execute a transaction.
Pare, Jr. et al., U.S. Pat. No. 6,192,142, discloses a debit account system which is “tokenless” in that plastic cards or other payment implements are not used. Instead, the system uses biometric identification data, such as fingerprint or retinal scanners, to identify the account and account holder. Universal implementation of this system would be problematic due to the expense involved in the installation of biometric scanner equipment. In contrast, the system of the present invention provides an distinct advantage over Pare, Jr. et al. in that it establishes a “tokenless” debit account while operating in conjunction with existing equipment, financial systems and protocols.